Neglected Your Tax?
A Daily Telegraph investigation revealed yesterday that approximately 4 million Australians and small businesses have not yet lodged their 2010 taxation returns. This is in addition to the 4.3 million who have not lodged a taxation return for the 2009 financial year.
The investigation revealed that many are not lodging their tax returns due to their financial situation. Many small businesses are struggling to stay afloat in the present economy. Despite the improvement in economic conditions over the last 12 months, over 700,000 taxpayers had to enter into payment arrangements with the Australian tax office in 2010 in order to repay debts estimated to total $9.4 billion. This is a 32% increase over the last 4 years. It is estimated however, that around 260,000 small businesses will default on these payment arrangements.
To add to this, the Australian Taxation Office in increasing its use of garnishee orders on small businesses. Garnishee orders are issued by courts and give creditors the power to withdraw funds from tax payers bank accounts. This has the effect of essentially making the business no longer viable, as all or a significant amount of funds are removed from the bank account in order to pay outstanding debts . The Commissioner of Taxation can use a garnishee notice to become a secured creditor over the assets of a business that has outstanding ATO debt. The order can also give the ATO the power to retrieve money from the business’ debtors. The order works by instructing the bank to direct funds from the bank account to the ATO.
The tax office is also putting pressure on those who have entered into payment arrangements but who have failed to continue to pay off the debts. The ATO is now pursuing these debts aggressively by issuing penalty notices to taxpayers. After a penalty notice is issued, if a taxpayer fails to make a payment, the company can be placed into liquidation or administration.
It is important now, more than ever to effectively manage your tax and financial obligations.
Call us now on 02 9411 5422 to see how we can help.